The Energy Blog

Just three kilometres southwest of Bolivia’s remarkable Salar de Uyuni salt flats (an 11,000 square kilometre expanse of brilliant white salt and rock formations) is an evocative sight: a steam train “graveyard” where the skeletons of disused locomotives rust away in the corrosive salty winds, at the end of an equally neglected train line.

If these steam-powered machines represent Bolivia’s past, the steam-powered future is taking shape in this ambitious nation, with 11 cutting edge Heat Recovery Steam Generators (HRSGs) made by Siemens’ NEM – the Netherlands-based leader in heat transfer technology – beginning to arrive in Bolivia after a journey of over 20,000 km from their factory in China.

They are being supplied as part of a commitment by Siemens and NEM (alongside Spanish consortium partner TSK) to increase the installed power generating capacity of Bolivia's National Interconnected System by 66% - in part through the conversion of existing simple cycle gas turbine (“SCGT”) power stations to combined cycle (“CCGT”); a more complex and powerful form of generation that can boost power output by a third for the same fuel costs.

Simple to combined cycle – a client journey

Conversion involves not just HRSGs and 14 of Siemens’ SGT-800 gas turbines but 11 SST-400 steam turbines with condensers, cooling towers, additional generator step-up transformers, and water treatment systems, along with a SPPA-T3000 control system to convert Bolivia’s Termoeléctrica del Sur, Termoeléctrica de Warnes and Termoeléctrica Entre Rios –ultimately adding a substantial 1GW to Bolivia’s electricity generation capacity.

It’s a process of growing complexity and power that mirrors Bolivia’s own evolution in recent years – and increasing appetite for both technological advance and capacity to drive the kind of economic and social expansion it seeks as South America’s fastest growing economy each year since 2014. And it involves the evolution of an already close partnership.

As NEM’s project manager Han Wijnands puts it: “We’ve been working closely with our customer to deliver this equipment and support their understanding of its technology and use, with a delegation visiting both the factory in China, our safety valve supplier in the UK and also undergoing operational training on the ground. Building that local skills base and operational capacity is at the heart of any good relationship.”

The overall NEM project scope for the combined cycle power plants includes the engineering, manufacturing and delivery of the 22 vertical double-pressure reheat once-through HRSGs – chosen for their small footprint, rapid and flexible start-up and modularity. As Mr Wijnands adds: “The benefits of this solution are its highly modular nature: each HRSG has a relatively low quantity of piping and equipment, and the boiler main body is delivered in just half a dozen parts; the inlet duct, two boiler modules, an outlet duct and the stack (in two parts).”

Bridging the gap

HRSGs use the energy in the hot exhaust gas of a gas turbine to generate steam for electricity production or for various industrial processes; ramping up the output and efficiency of existing power stations.

Each HRSG contains 2,700 single tubes of 12 metres in length but the equipment has been delivered in six primary modules for rapid assembly. Yet modularity or no modularity, the logistics challenges to bring this additional capacity – quite literally – to market are substantial.

Each HRSG module, for example, weighs some 154 tons and is being carried on a trailer that alone weighs 70 tons itself. With two core modules per HRSG, each requires a convoy that includes two service cars supporting four mechanics, as well as an advance team that includes a structural engineer to ensure that the myriad bridges on Bolivia’s roads over the Andes are sound enough to support the weight of this load – and can be reinforced with steel girders when they are not.

With – at the time of publication – the first two HRSG’s having left Chile’s Arica port and begun their journey, Siemens’ and NEM’s project teams are eagerly anticipating their arrival; sites are cleared, prepped and ready and Bolivia’s operational team are waiting for the moment of magic when the technology comes to life. Lights, probably a few cameras, certainly steam, and a great deal of action await.

Torsten Wetzel of Power Generation Services sums up his key take-aways from POWER-GEN 2017 in Las Vegas.

It is no longer a secret that digitalization, meaning using all kinds of data for improving operations, is the key to the industry’s future. Everyone I talked to at the Power-Gen conference in Las Vegas was aware of that. Power utilities are even aware of the necessity of data-driven monitoring of all assets. However, the concept needs fine-tuning and an adaptation to the specific requirements of each utility in its market.

The major divide, of course, is between utilities in regulated and deregulated markets. The more deregulated a market is, the more competitive power utilities have to be, which in turn influences their asset management. Usually, very small teams handle this, sometimes just two or three people.

These teams are not looking for out-of-the-box software tools which can be randomly scaled. They are actually looking for very specific solutions that put their customers at the center and, for example, provide just the right information dashboards for solid and efficient decision-making that helps to improve their customer service.

Building frameworks for an integrated in-house & outsourced asset management

For example one independent power producer from North America I was talking to is running five power plants and doing business in a deregulated market. They are doing it in a very lean fashion. They are not only interested in getting a comprehensive view of their fleet, but are also ready to outsource specific management tasks.

Huge power utilities usually have vast monitoring & diagnostic centers with numerous experts. Smaller power utilities cannot afford this. That’s why this North American IPP had to develop an own asset management strategy. They are running business-critical tasks such as performance management and maintenance management internally, but are thinking about outsourcing certain functionalities which require intensive knowledge such as diagnostic services incl. anomaly detection.

Cloud-based solutions can be an interesting option here. But of course, they need to be 100 percent reliable and safe.

Siemens looks like an interesting partner to many power utilities because we don’t sell ready-made packages. We developed a vast array of toolsespecially for usage in power generation fleets which can be combined in different ways to meet every client’s unique requirements – without regard to the original equipment that they are using. Our solutions are vendor-agnostic and our starting point is not a given software solution, but the look at a client’s infrastructure and market.

The client defines the information that is absolutely critical for them to know. Is it the status of their assets? Their reliability performance? Is it the costs of energy production? The costs of maintenance?

The goal is a customized software solution. Digitalization is like a journey with many stops. And I like accompanying utilities on this journey.

Ever since the first computer worm shut down most of the internet in 1989, ransomware, malware, and other malicious online attacks have become the common vernacular defining cyber security challenges in the 21st century. But in 2017 the scale and sophistication of these attacks has grown exponentially. In May, the WannaCry cryptoworm hit 230,000 computers in 150 countries in just one day, with an estimated cost of $4 billion.

What this means for the energy sector
Few industries have been immune to the heightened risk of a cyberattack, and the energy sector has become a particular target. Ensuring security of this critical infrastructure has been rendered increasingly complex by the fact that information technology (IT) and operational technology (OT*) have converged, opening up an increasingly distributed and diverse array of potential attack vectors.
(*OT is technology that interfaces with the physical world and includes industrial control systems, supervisory control and data acquisition (SCADA), and distributed control systems.)

This convergence in the era of digitalization is inevitable. Businesses need data to be able to travel from the field to the control room through an enterprise network. This is the hybrid infrastructure that underpins operational efficiency, data-driven servicing, and improved responsiveness to market signals. This convergence also underscores the need for unique security solutions.

The challenges of IT/OT cyber security
The challenge of securing the energy sector’s critical infrastructure in this environment is significant. As Leo Simonovich, Vice President of Global Cyber Strategy at Siemens puts it: “To detect an attack in the utility environment, you have to be able to perform security analytics at the asset level, the SCADA level and the network level; you can’t simply drop IT solutions into the OT environment.”

Advanced grid security, for example, requires complex measures defined in global standards such as IEC 62433, IEC 62351, and ISO 27k, and recommended by regulatory authorities like NERC CIP. These security measures must be enacted by a partner with a deep understanding of both the energy sector and how such security solutions integrate with the processes behind them.

Security and support for plants and grids
Siemens has long offered a comprehensive security service that includes industrial security monitoring; remote incident handling; perimeter firewall management, review and penetration testing; antivirus and whitelisting management; patch and vulnerability management and more, for plants both from Siemens and third-party providers.

The last point is crucial. As Ali Elnaamani, Siemens’ Global Head of Cyber Security notes, it is important for clients to have access to a comprehensive solution that’s vendor-agnostic.

“Customers are increasingly asking for one integrator to provide security solutions for their entire fleet, and one contact in case of a cyber incident. We can provide this with the benefit of a holistic understanding that comes from building our OT portfolio from the ground up.”

Building security from the ground up
When building a cyber security program, the first step is often surprisingly straightforward: assessing where the utility or organization is on the maturity curve.

Simonovich explains: “The first thing we ask a customer is: Do you have a strategy? Have you dealt with the fundamentals? Have you transformed your security environment? We then look at how to begin monitoring and detection – smartly, aligned with the business objectives and priorities.”

Often clients have digitalized and connected legacy assets, which in itself presents challenges. According to Simonovich, “the industry is being connected at the edge, [for example] a platform or a substation, and at the core. A lot of that connectivity, as seen in distributed energy for instance, is not linear. This creates an increased attack surface that is spread out and harder to secure.”

Elnaamani adds that Siemen’s takes a holistic approach to designing the right kind of strategy that incorporates the right kind of technology. “Siemens has a vast amount of secure networking equipment. We are the leading provider of industrial firewalls in the world today, for example. But technology needs to be supported by an overall strategy in a risk and compliance-based approach.”

Staying ahead in a cyber arms race
Siemens has long been working to strengthen its capabilities in a rapidly evolving threat environment. The company built three advanced cyber defense centers in China, Portugal and the US to execute end-to-end advanced monitoring, with the teams steeped in OT-specific engineering able to deploy a wide range of tools including advanced penetration testing, network monitoring and anomaly detection.

Siemens has also engaged in partnerships with some of the most advanced actors in this space to further bolster its capabilities. Earlier this year, in one of the largest strategic relationships ever inked between a global engineering company and an IT provider, Siemens signed a Memorandum of Understanding (MOU) with premiere digital services provider Atos. This partnership gives Siemens access to Atos’ 4,500 worldwide security specialists and eight 24x7 Security Operations Centers, creating a unique set of IT/OT capabilities.

This relationship was further enhanced by Siemens’ subsequent strategic partnership with Darktrace, a leading machine learning company for cyber security. Drawing on advances in machine learning and probabilistic mathematics, Darktrace’s Industrial Immune System platform works to detect and remediate cyber-threats at their nascent stages. By learning the ‘pattern of life’ for every network, device, and user across both OT and IT networks, the company uses AI to identify and automatically take action against emerging attacks. The Siemens-Dark Trace partnership reinforces our work in security program design, security lifecycle management, plant security monitoring, and incident response.

Strategic thinking across the spectrum
Such tools are vital to building a powerful defensive armament against a growing ecosystem of malicious actors. They allow Siemens to scour networks for weak links, providing strategic as well as remedial technological guidance to strengthen or close them.

As Elnaamani puts it: “In a world in which you have a decentralized operating model, with asset owners relying on various service providers for their IT, the weakest link can be the cause of a major incident.”

Siemens, he says, can play a critical role in helping “lift the middle” and address some of the industry’s weak points. “We are providing remediation measures for our customers globally today,” says Elnaamani, “but we are also highlighting that it’s really important to take a step back and not just react but [ask the question]: What is my strategy?”

Power generators face a range of pronounced disruptions to business as usual. Fleet optimization, for example, has become an increasing challenge as installed renewables capacity rises faster than many operators would prefer.

This growth is contributing to long-term energy price declines that, alongside the global sustained drop in fuel price, are putting tremendous pressure on power generation margins; even as they are being challenged to invest in modernized infrastructure to remain viable.

The combination of necessary capital improvements and slow growth in energy demand is creating a mismatch between CAPEX and cash flow – and creating a portfolio that can help smooth the impact of price volatility across fuel types is a real challenge.

To Siemens Power Generation Services Head of Digitalization, Stefan Bungart – cliché though it may be – it’s also a real opportunity.

As he puts it: “The pressures on power generation operators are undoubtedly growing and require some creative thinking to resolve. But note that the word ‘digital’ hasn’t cropped up. That’s because it’s not a cause of disruption for power generation operators. But it can be a critical enabler of positive change, if grounded in real business pain points.”

He added: “Most generators are already reaping tangible benefits from early-stage initiatives around sensors, controls, and predictive data analytics. It’s also helping most lower the cost of maintenance, which can account for as much as 40 percent of operating costs. Digitalization offers a clear and proven path to reducing this, as well as the costs associated with unplanned down-time and replacement part inventories.”

Digitalization Down Under

Australia’s Origin Energy is a compelling case in point. ASX-listed Origin operates one of Australia's largest power generation portfolios with 6,010 MW of capacity and is also the country’s largest energy retailer with approximately 4.2 million customers across industrial, small business and residential markets.

They are also operating in one of the world’s most volatile energy markets. To meet Origin’s requirements, Siemens helped set up a Monitoring and Support Centre (MSC) in Brisbane that enabled the company to support their fleet operators in continuously monitoring its generation and distribution system (which is spread across the vast distances of eastern and southern Australia) from a central location.

As a report from Siemens Customer Magazine puts it: “Red lights suddenly flash on the computer screens in Origin Energy’s MSC in Queensland. Output from a big wind turbine farm, 2,000 km away in South Australia, has abruptly dropped to zero as a previously strong air current dies. The wholesale electricity market across Australia reacts in seconds, rocketing the price from AU$50 a megawatt to the capped peak of AU$12,500.

But as the report goes on to note, for the two controllers sitting in the high-security, high-tech MSC it’s all in a day’s work. The loss of output from South Australia is flagged across the communications network in milliseconds; the reaction – raising output from a power plant 1,900 km away to the southeast in rural Victoria – is a few taps on a keyboard. No human turned a switch at the power plant. Control from the MSC is direct; the response instant.

And the result of this investment has been striking: Origin has achieved an 80 percent reduction of manual operator actions as a result, with 98 percent start-up reliability.

A changing environment for operators

Although ultimately the challenge each power generator faces depends to a large degree on their individual profile, a key trend is the move away from baseload generation to cycling for thermal plants, with two to three starts per day and a shifting power generating profile.

“We’re increasingly working with customers to shift maintenance intervals and push outages out, not by weeks but by years. We’re using plant data to make sure this shift can be achieved without compromising reliability – we talk about the “optimum level of neglect,” as Stefan Bungart puts it.

“You can see rapid changes in how people think about their operations and how they run them. We’re supporting customers with data to build more complex economic models, incorporating non-tech elements and other variables in their scenario planning. This support isn’t minor tweaking to bring in 2MW more. It’s a real sea change in operational strategy.”

The creation of a “digital twin” of the full power plant can be one way to help finesse this data to enable new business models, boost asset optimization and create a scalable development environment.

And as Stefan Bungart suggests, in the not-too-distant future, inventories of parts will be reduced to a fraction of current levels. This will be possible through the use of onsite 3D printing as well as condition-based recommendations through advanced data analytics.

Digitalization continues to dominate headlines in the power generation industry – but now it’s starting to take on real context and meaning as innovations are implemented around digital services and they increasingly bear very tangible fruit.

By 2020, the digital universe will reach 44 zettabytes, or 44 trillion gigabytes; nearly as many digital bits as there are stars in the universe. No horoscope is needed, however, to read the emerging constellations for the energy sector in these digital stars.

Markets are already evolving rapidly: on the supply side networked and automated infrastructure and the rise in distributed energy are having a huge impact on load dispatch – demanding more flexibility and systems integration.

As any navigator will tell you, those who can read the stars can always plot their path forward. The data universe offers a clear parallel: a surge in the capabilities – and affordability – of cloud computing, sensors and machine-to-machine learning means reading and analyzing patterns in the space of digital noise is increasingly an industry “must.”

Basic monitoring of temperature and pressure has existed for years. But as Tim Holt, CEO of the Siemens Power Generation Services Division put it in an earlier interview: “Miniaturization means sensors can now be installed in places they couldn’t before, and robustness means they can go into much harsher environments.”

As Aymeric Sarrazin emphasizes, “We are facing a revolution in technologies and digital capabilities. With this, huge opportunities are opening up. We can simulate, test and optimize products, production processes and plants within a completely virtual environment– improving the productivity of both capital and labor. The extent to which we can support customers by analyzing data is already impressive and we’re just scratching the surface.”

Sustainable planet, sustainable profit

Today’s four sustainable energy system challenges – security of supply, affordability, climate protection, and resource efficiency – require precisely such ingenuity to overcome. Amid a challenging market however, executives on the supply side are often understandably concerned with more immediate commercial questions.

These include “How do I reduce my maintenance costs?” “How do I prevent unplanned outages?” “How do I reduce emissions?” and “How do I produce more without increasing my costs?”

Those bold enough to seize the digitalization opportunity will find that answers are easier to come by than many anticipate: Siemens’ Digital Services team, for example, is using data-driven, tailored services that increase asset availability, optimize maintenance intervals and improve performance that are delivering real value.

Virtual analysis, real results

These are not “magic box” packages. They are developed in close partnership with customers – bringing the digital services team’s world-class experts in pure math, coding and engineering around the table to build lean solutions that identify and resolve client pain points. Siemens Fleet Center Solutions, for example, has achieved a 34% reduction in emissions, 98% starting reliability and 80% reduction in manual operator actions.

As Sarrazin notes: “We are developing contracts that are based on profit-sharing rather than fixed internal payments, in order to share both the risk and the upside generated from our digital offerings. That’s how confident we are that digitalization is a game-changer for our industry and that Siemens is the best-positioned company in the world to tackle this new paradigm.”

The seamless flow of data allowed by digitalization between every step of the value chain, from product design through planning, engineering and production to servicing and maintenance, allows much higher levels of responsiveness. Aligning digital services with innovations such as 3D printing opens up even more opportunities.

It’s blue skies thinking at this stage, but as Sarrazin puts it: “We are not too far from a future in which a gas turbine can be set up that learns directly from the market to optimize performance and profitability in a spot market – and even orders its own parts to be 3D printed on demand.” Not just smart, but autonomous turbines? Watch this space!

As one of the major global engineering companies, Siemens has been playing its role in improving living conditions for societies around the world. Perhaps a lesser known fact: For the last 125 years it has also been Germany’s biggest private educational institution. Now, the company is transferring its expertise in vocational and occupational education overseas by opening the first industry-run vocational training center in Ain Sokhna, Egypt.

One of the aims is surely to train technicians and engineers to service and maintain Siemens’ 24 powerful H-class turbines at the heart of the new power plants in Burullus, Beni Suef and New Capital. But, as Ahmed El Saadany, Learning Manager at Siemens Egypt, points out: “The vocational and occupational education at the new Training Center will also prepare candidates to join many other industrial sectors and better match the qualifications these industries need.”

Whole career path created for Egyptian youth

Earlier this year, Joe Kaeser, CEO of Siemens AG, had already made it clear that Siemens’ engagement for Egypt didn’t stop at delivering and installing the biggest power plants in the world. At the ceremony to mark the occasion of thefirst fire of the gas turbines in Siemens’ Megaproject in Egypt, attended by German Chancellor Angela Merkel and Egyptian President Abdel Fattah el-Sisi, he announced the details of the strategic alliance agreement between Siemens, GIZ and Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) to support and develop occupational training in Egypt.

Talking on the phone last week, Emad Ghaly- CEO of Siemens in Egypt was able to give me some more background information on this exciting endeavor. “We are seeking to decrease unemployment and increase employment,” he says. “We will bridge the skill gap that the Egyptian vocational education now has by establishing a new training center in Ain Sokhna and developing an already existing one in El Amreya owned by the government.” Thus, a whole career path is being created for the next generation of skilled workers and technicians in Egypt. “The students will be trained in advanced skills such as operation, maintenance, and repair in the energy sector as well as other industrial sectors,” explains Ghaly. “The training center will support the long-term growth of Egypt and aligns with the country’s strategic vision 2030.

Integrated approach needed to connect industry and education

In the country of 104 million inhabitants the human resources already exist. 2.5 million students are currently enrolled in technical secondary high schools in Egypt. “But the vocational education system has suffered for years from mismanagement and misallocation of resources – and, more importantly, the lack of an integrated approach,” explains Dr. Amr Abdelkawy the managing director of NASS Academy, which is one of the successful models for the vocational institutions in Egypt and partnered with Siemens on other education projects.

“There was a lack of a singular vision to connect the country’s human resource needs with its supply tools,” he tells me. “Siemens is contributing by pushing towards an integrated approach that brings the industries as active participants to the table instead of being just passive recipients like they are now.” After all, as employers the industrial companies are also beneficiaries of vocational education. He affirms: “Siemens has understood the responsibility of integrating within the community and building relationships at different levels.”

Practical training simulating real-life conditions

The Training Center will be the first fully-fledged energy training center in Egypt. Over the next four years, Siemens and BMZ will train 5,500 engineers and technicians. The Ain Sokhna Center will open its doors in late 2018, hosted at the service center in in the area of Suez Canal Economic Zone, where Siemens’ turbines and power equipment are maintained. This will allow the students to stimulate real life conditions in their training by using Siemens’ advanced equipment and state-of-art technology.

“Siemens will also develop and strengthen a public vocational training institute in the El Amreya area that will prepare suitable candidates who could be able to join such a highly developed training center and gain the qualifications needed to join the expanding industrial sector,” says Thomas Leubner, Global HR Learning Manager, Siemens AG. With this project, Siemens is truly championing the idea of dual education in Egypt – a vocational high school that could prepare candidates with hands-on technical education at an early age at high school level. This dual education system will allow the students to spend half of their education in the classroom and the other half in industry-specific, on-the-job training, and improve their employability.

If you ask traveller’s bible Lonely Planet, Bolivia is a land of rocks, rivers, and ravines: “rough around the edges, superlative in its natural beauty, rugged, vexing, complex and slightly nerve-racking”. The landlocked nation of 11 million inhabitants pushes colourfully up against terrain as diverse as the Amazon Basin rainforest, the Andes Mountains and the Atacama Desert.

Bolivia is as rich in natural resources as it is in striking scenery however, and has bold ambitions to transform its economy – as well as bring reliable electricity supply to the 1,200,000 Bolivians who still go without. To help realise this vision, it has trusted partner Siemens with delivering the energy infrastructure that can trigger a “virtuous circle” of economic and human development.

A trusted partner

Siemens has been active in Bolivia for decades and realized the first large project in 2008, when it completed the La Arboleda 230/115-kV substation for ISA Bolivia and integrated it into the country’s power grid via a 230-kV line, replacing an older installation: the substation is now the cornerstone of Bolivia’s power grid.

Two years later in fiscal 2010 – building on a growing relationship across sectors between Bolivia and Siemens – local power utility Ende Andina SAM awarded Siemens a contract to supply four gas turbine generators with a total capacity of 116 MW.

With energy demand and Bolivia’s ambitions both growing, last year the country contracted Siemens and Spanish consortium partner TSK to execute the biggest power expansion project in Bolivia’s history in a contract that will see the partners add 1GW to the grid; increasing the capacity of Bolivia’s National Interconnected System by 66% via the delivery of 14 SGT-800 gas turbines, 11 SST-400 steam turbines with condensers, 22 steam generators, 25 generators and a SPPA-T3000 control system.

This contract is at the heart of an action plan that will see power generation almost double to 14.2 TWh in 2026, from 8.7 TWh in 2014. The project is quite a journey for Bolivia. And for the equipment that will help sustain this transformation, “journey” is more than a metaphor: Siemens’ 14 gas turbines, 11 steam turbines and 22 steam generators must undergo a real trip before being commissioned in this land-locked nation.

Equipment will arrive over land and sea from Sweden, China, Germany, Italy, Indonesia, Vietnam, and neighboring Brazil, in a global effort that will cover tens of thousands of miles and some profoundly challenging terrain: over 400 heavy loads will ultimately cross the Andean Mountains into Bolivia, through passes at altitudes of over 4680 meters, via 180 bridges, the smaller of which require engineering work to support even the modular components being shipped.

Transformative power

The project is part of Bolivia’s “2025 Patriotic Agenda” (2025 is Bolivia’s 200th anniversary since the establishment of the Republic of Bolivia) – which includes the goals of eradicating extreme poverty; 100% water and sanitation coverage; 100% electricity, phone service, and Internet coverage; 100% access to health services; 100% coverage of primary and secondary education and more. The country has already made great progress: between 2002 and 2014 extreme poverty more than halved – from 39.5% to 17% – while income inequality also trended sharply downward.

The ultimate goal, however, is not to stop at Bolivia’s borders, but become South America’s energy hub; adding electricity to the gas exports it already makes to neighbouring Brazil and Argentina that have helped it become the fastest growing South American economy every year since 2014. Siemens looks forward to supporting this growth story.

While previous industry revolutions gave industry new tools, the fourth revolution gives us new knowledge. Every day, the keeper of this knowledge – the internet of things – is adding five million new devices (we’ll go from today’s 8 billion connected devices to a trillion by 2030). Yet at the same time, the industrial world is still only in the very early stages of tapping into this new intelligence: While 90 percent of the world’s data was created in the last two years, only a miniscule portion of this data has been analyzed or used.

So imagine an industry in which disruptive technologies are being rapidly commercialized and going online – all while every decision is data driven. When you look at it this way it’s easier to see how oil and gas companies, including offshore operations, could soon operate under entirely new business models.

This doesn’t mean that new business models need to emerge overnight. The first step, simply, is to get connected.

Going digital isn’t an overhaul. It’s a journey. And at Siemens, we believe it’s also collaborative. That’s the spirit in which we recently unveiled our new vision to help offshore oil and gas operations begin a pathway to becoming fully digital enterprises: Topsides 4.0.

Topsides 4.0 is a partnership. We work with customers in the early conceptual and design phase of a project and continue through the build phase and after deployment. Everything happens in a virtual environment to enable digital project management and manufacturing, as well as virtual testing and commissioning. Then, in the end, we deliver the customer an intelligent digital twin that can interpret raw data. It also can be used to provide site training for employees virtually before a site even exists.

Topsides 4.0 was designed with the present in mind, too – a market and price environment some now call “lower forever.” Our intent was to increase efficiency and profits by reducing project cycle time and unplanned downtime, including by increasing offshore manning for operations and asset monitoring.

So far, midsized FPSOs using Topsides 4.0 have reduced overall project cycle times by between three to nine months while reducing CAPEX by up to $15 million. Right now we’re also estimating reductions of more than $100 million OPEX over a 10-year period.

Previously, CAPEX expenditures into a superior technology might have provided a significant boost to safety, productivity or efficiency – but that gain was one-time and static. On the other hand, with digital, all of these gains can grow continuously over time as operators gain more knowledge.

This is another example of why collaboration is mission critical. Reaping the full benefits of the digital transformation will require new alliances focused on remaking our industry. Specifically, we need an open data ecosystem in which various stakeholders share data.

When we deliver customers their digital twin, its data and its knowledge is theirs. Yet this data and knowledge can be shared and transferred to our digital services platform where we can provide additional decision support. With that, we can monitor their sites and share those insights, but we also can share what we learn from monitoring our entire global installed base.

For now, oil and gas companies still typically prefer to keep operational technology data inside their own IT firewall. We hope we can help change this culture while ensuring data security and honoring the need to protect our customers’ confidential information from industry competitors.

Our view is: let’s keep out hackers. But let’s also trust each other as we forge ahead together in a new spirit of collaboration.